Sallie Krawcheck

Founder of Ellevest, a Digital Investment Platform Made by and for Women

Discussion

Hi — I'm Sallie Krawcheck, founder and CEO of Ellevest. I started Ellevest to help women dominate their financial futures and get them invested in their biggest goals.
Thanks all for joining me and for your questions. I hope you'll all check out what we're up to over at Ellevest.com

@jacqvon I think it can often be having the network of investors. Cold calling venture capital firms is a tough business; the odds are dramatically stacked against you. That's why I'm happy to see crowd funding sites take off. For early rounds, they do a great job of leveling the playing field

@bentossell Well, they both involve a lot of hard work! The experience as well is directly applicable; in addition to myself, our Ellevest Chief Investment Officer has decades of investing experience, and our Chief Compliance Officer does as well. I recognize that people are entrusting us with their money -- more than that, with their goals in life -- so I wasn't going to start Ellevest if I couldn't pull together a top-notch, experienced team.

@ems_hodge Hi, Emily. We built Ellevest for women because there's a "gender investing gap." In other words, women invest less than men do...and it can cost them hundreds of thousands of $s (or more) over their lives. We set out to get to the root causes of why and work to solve them.

@ems_hodge We built into our offering that women live longer than men (really important to get retirement savings right) and our salaries grow differently than men's (also important for reaching all kinds of goals). And we also found that women tend to approach investing not just as a means to make more $s but as a means to reach goals...like start a business, buy a home, retire well. The industry's goal of outperforming the markets doesn't resonate as much, according to our hundreds of hours of research with women.

@ems_hodge And, finally, women told us that the investing industry hasn't particularly felt like it's "for them." We have less patience for the industry jargon and the sports-ification of the markets. We wanted to build something that felt welcoming to women and spoke directly to them and their needs and concerns.

@andrewett Invest a bit out of every paycheck and make it a habit. (This also helps modulate the highs and lows of the market, because sometimes you'll be "buying high" and sometimes "buying low.") Invest that money in a diversified investment portfolio; at Ellevest, we invest in ETFs, which give you low-cost exposure to the markets.

@andrewett Many people also prefer to invest with a firm that's a fiduciary (which means they must put your interest ahead of their own). We're a fiduciary at Ellevest; we also have no minimum investment size, because we wanted to make investing accessible to a broad range of folks

@lisetteguittard It does indeed. We keep more of our money in cash (i.e., in the bank) than the guys do. There is earns pretty close to nothing, which means we're actually going backwards when you factor in inflation. While investing has its up's and down's, we believe that a diversified investment portfolio can deliver about 6% over time (the equity market has historically returned 9% over longer periods of time). And if you invest regularly, you can even out some of those ups and downs, by investing in different types of markets.

How can you justify higher fees for your services than other services like Betterment or Wealthfront? Yes you are much more competitively priced than a traditional wealth advisor but you are more expensive than the leading robo-advisors.

@thesegurashow It wasn't our goal to be the cheapest digital advisor, but to provide the most value for women. For example, we provide a full financial plan, in which one can make trade-offs among your goals (i.e., retire later so you can start your business sooner and see the implications of this). We provide highly customized investment portfolios for each goal (others can have you choose from one of a handful of investment portfolios). Each goal has its own "risk budget;" in doing this, we target getting you to each of your goals -- or better -- in 70% of markets (others are at 50%). We provide you with a heads up and action steps to take if you fall off track to reach your goals. And we actively adjust your investment portfolio as you get closer to your goal, to give you a higher chance of reaching that goal. We also factor in women's longer lifespans and the fact that their salaries peak sooner than men's. We spent hundreds of hours of research with women, and pinpointed these capabilities as important to them; others don't provide them. At our cost of 50bps, the fee for a $50K portfolio is less than $1 a day.

@salliekrawcheck My biggest concern with this is that a dollar a day at a 7% rate compounded continuously results in $80,000 in lost returns while your competitors would only lose $40,000 since they are half that amount. Those are quantifiable amounts... It's alot of money left on the table by your services... Do your other services really counteract all this money left on the table?

@thesegurashow In addition to the features laid out above, research from Morningstar indicates that the approach we use for portfolio optimization (using a total wealth approach, including human capital, and liability relative optimization) can add 50bps+ of value annually. This is different from how others invest.

@daniellenewnham Hi, Danielle. It's hard for me to speak to tech; but I can tell you in finance, the fact that it's been so male meant that there was an opportunity for an Ellevest. (I even took the idea to the head of a big bank, and his only reaction was that women's husbands manage their money for them.) So I think we can see opportunities that others might look right through

@daniellenewnham In my case, I actively searched for a range of investors in Ellevest who would "get it." This included some from the industry, who understood the opportunity; and it also included a number of successful women investors, who had seen the issue from the other side. I know one doesn't always have the luxury of choosing your investors, but having ones who "get it" can make a world of difference.

@etregirls I think this can be an issue not just for financial confidence, but for any kind. And not just in middle school, but beyond. The research is pretty clear that professional women have had to navigate a bunch of unwritten rules about acceptable behavior historically. I don't know that there's an easy answer, since these ideas can be part of our upbringing and can be a implicit gender expectation. In the workplace, talking about it, pointing it out, discussing it are means for making everyone aware and then potentially overcoming it.

@lisetteguittard The big firms have been at this for awhile, but without a great deal of success. I believe it's because they have typically defined the problem as a "marketing problem" rather than digging in to how to change the product. For example, we have found exactly no women in our research who just can't wait to pick between mutual funds and ETFs. And not many who can't wait for their investing show to start. And only a few who really want to "outperform the market." So we started back at the product level in building Ellevest, rather than assuming we just needed a good marketing program.

@lisetteguittard Definitely! We practice what we call "goals-based investing," which is that we invest not to outperform some market index, but for you to reach a specified goal over a specified period of time (start a business in x years / retire when you are x years old). As you might imagine, this involves a different kind of investing than what most do today. We provide highly customized investment portfolios for each of your goals; and we actively adjust them over time, to increase your chances of reaching your goals. We shoot to get you to your goal (or better) in the significant majority of markets. We give you a heads up if you fall off track for your goal and guidance for how to get back on.

@lisetteguittard Another important point: we don't ask you how much risk you want to take. Instead we determine how much risk you can "afford" to take and allocate that to you. We are a fiduciary, so we are obligated to put your interests ahead of our own.

Hi Sallie. Congrats on all of the success. If you look across the women who have signed up for Ellevest, what is the most popular goal that they choose to invest in? Can you give any info on the typical demographics of your customers (age range, geography, etc)? Thanks!

@3tweed Hi, Andrew! The most popular goal right now is "Yes Me" (which is our version of Build Wealth). What is great to see is that about 3/4s of our clients set up recurring deposits, so they are making investing a habit. Their ages range from late teens to young 60s, but center from their late 20s to young 40s; they tend to be professional women.

Hi Sallie! Since I started working professionally I've noticed the challenges women face every day become more defined with time and exposure, and that sometimes can create a heightened sense of awareness / sensitivity around perhaps not-so-equal situations. Any advice for those of us who are working toward closing those gaps for women in our industries without letting the paranoia that perceived sexism can cause for us get in the way?

Hi Sallie. What do you believe are the most important actions that a young female can take to help herself and other women close the various gaps that set women back in today's world (e.g., wage gap, investing gap, etc.)?

@britapriest Brita, so glad you asked! I've been thinking about this a lot -- because there are a number o gender $s gaps. There's the wage gap, the investing gap, the expense gap, the work achievement gap, the debt gap.....and they can cost women literally millions of $s over their lives. So we've pulled together a guidebook called "Mind The Gap" which walks through each type of gap, as well as sources, hacks, advice, hard-earned lessons etc for closing them. It's a free resource over at Ellevest.com. Can't wait to hear what you think!